Bofinger (2003) presents one of the most uncompromising proposals prioritising economic
growth. He advocates a benchmark system for best practices of fiscal policy that contributes
to economic growth and employment.
The proposals put forward by Fitoussi (2002) are distinctly less radical but still motivated by
the idea that fiscal rules should be state-dependent, i.e. should adjust to prevailing economic
conditions or allow more leeway to react to changing economic conditions. In concrete terms,
Fitoussi (2002) argues that the deficit rule should be replaced by a debt rule which, in contrast
to a medium-term target of close-to-balance or in surplus in the old SGP, would allow
Member States to run a deficit in the medium term. Fitoussi's (2002) second suggestion is to
allow for the 'golden rule' of public finances, highlighting the importance of public investment
for economic growth.
Mathieu and Sterdyniak (2003) argue against the desirability of supranational economic
policy co-ordination as a whole. In their view, surveillance of economic policy should be
'subordinated to the national policy prerogative of managing the production-inflation trade-
off'. The Commission and the Council should only act if spillover effects effectively endanger
the inflation target for the euro area as a whole.
Supporters of long-term sustainability: The 19 economists in the fourth group could properly
be characterised as supporters of long-term sustainability. On average, they mobilised shortly
before or after November 2003 and host the largest share of academics as well as a relatively
large share of economists from small European countries. The common denominator
emerging from their proposals is the view that fiscal rules should focus on the long-term
sustainability of public finances, rather than imposing annual deficit targets. Their proposals
are mostly based on the argument that putting more emphasis on long-run sustainability
within the set-up of the SGP provides additional leeway for short-term stabilisation policy and
growth-oriented economic policies, without jeopardising fiscal discipline.
Two elements distinguish the fourth group from the third; one of degree, the other more of
substance. In a virtual hierarchy of aims, the economists from the fourth group would put
more weight on the fiscal stability aspect of the SGP than on economic growth. Moreover, the
supporters of long-term sustainability show a more pragmatic or differentiated approach than
the third group. This is evidenced by the fact that on average they put forward almost two
proposals per paper or publication. Prominent representatives of the fourth group are Beetsma
and Debrun (2003), Calmfors and Corsetti (2004) and Pisani-Ferry (2002).
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